Which Technology And Oil Stock Plays Are Performing The Best?

Technology and oil were among top-performing ETFs during the past month, though health care and cocoa led their respective sector and commodities categories.

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Little change occurred near the top of the diversified stock fund category as the broader market remained relatively stable during the past month. It was a close race as the top four performers were separated by one basis point at most.

First Trust Dorsey Wright Focus (FV) moved up two spots to take the lead with an 8.1% year-to-date gain through May 9, according to Morningstar Direct.

PowerShares S&P 500 Pure Growth (RPG), last month's top fund, tied with FV with an 8.1% return. The former Guggenheim S&P 500 Pure Growth underwent a name change when Invesco completed its acquisition of Guggenheim's ETF business on April 9.

First Trust Dorsey Wright Dynamic Focus 5 (FVC) technically stayed at No. 2 with an 8% YTD advance. Moving up one notch from No. 5 was PowerShares QQQ Trust (QQQ), also weighing in with an 8% gain. FV provides exposure to five First Trust sector and industry-based ETFs that Dorsey, Wright & Associates think have potential to outperform. FVC also offers exposure to five First Trust ETFs, plus the Nasdaq US T-Bill Index, as a risk management strategy.

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A little more movement occurred in the sector fund category. PowerShares S&P Small Cap Health Care Portfolio (PSCH) took over the top spot with a 20.4% return. Last month's winner, ETFMG Prime Cyber Security (HACK), followed close behind with a 19.8% gain, while First Trust Dow Jones Internet (FDN) moved up a step to third with a 19.6% return.

"Extraordinarily strong earnings momentum, corporate tax cuts and fiscal stimulus underpin our positive view," he wrote in a recent commentary. "We like the momentum and value style factors, as well as financials and technology."

The foreign sector saw bigger changes. VanEck Vectors Egypt (EGPT) rushed to the top with a 17.1% YTD gain, while iShares MSCI Saudi Arabia (KSA) fell to second place with a 12.4% advance. Global X MSCI Norway (NORW), up 10.7%, hopped to third from ninth.

Over in the commodities category, cocoa showed continued strength as iPath Bloomberg Cocoa SubTR ETN (NIB) held court with a 46.6% gain. Three oil plays slid into second, third and fourth place, pushing wheat and grains lower. West Texas intermediate crude made headlines during the week — first, as prices topped $70, then took out $71 a barrel, to multiyear highs.

Surging Oil

PowerShares DB Oil (DBO), United States Oil (USO) and United States Brent Oil (BNO) moved up from fifth, sixth and seventh place, respectively. DBO gained 21.6% year to date, USO 19.7% and BNO 18.9%.

"A rise in Persian Gulf-related geopolitical risks has helped fuel double-digit gains in oil this year," BlackRock's Turnill said. "A favorable supply-demand picture has provided additional juice, making oil a top-performing asset class in 2018. For investors seeking exposure to oil now, we see more appeal in energy equities than in the commodity."

Why does he favor energy stocks over the underlying commodity?

"Oil prices have run well ahead of energy stocks this year but this trend has started to turn," he noted. "One factor supporting energy firms: their focus on capital discipline, evident in first-quarter earnings results. Unlike in some past oil market rallies, companies are not making huge investments in future production. Instead, they are using free cash flow to return capital to shareholders via increased buybacks and dividends."

Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.